ITO(Central), Aurangabad V. Shri Umesh M Sanecheti, Aurangabad

ITA 630/PUN/2010

• Counselvise Citation: 63024514 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Keywords: Income from undisclosed sources
• Section: 5(2)

Judgement Text

1 ITA 630 & 631/PN/2010 IN THE INCOME-TAX APPELLATE TRIBUNAL PUNE A BENCH, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 630 & 631 / PN / 2010 (ASSTT. YEAR: 2006-07 & 2007-08) INCOME-TAX OFFICER (CENTRAL), AURANGABAD APPELLANT VS. SHRI UMESH M. SANCHETI, M/S. NAKODA, NAVAJEEVAN COLONY, VAIJAPUR, AURANGABAD DT. PAN: AEUPS0179N RESPONDENT APPELLANT BY : SHRI S.K. AMBASTHA RESPONDENT BY : SHRI NIKHIL PATHAK DATE OF HEARING : 23.12.2011 DATE OF PRONOUNCEMENT : 23.12.2011 O R D E R PER I.C. SUDHIR, JUDICIAL MEMBER : IN THE ABOVE APPEALS, THE REVENUE HAS QUESTIONED T HE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY LEVIED BY THE ASSESS ING OFFICER U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT WITH THIS OBSERVATION THAT THE ASSESSEE WAS ENTITLED TO THE IMMUNITY AVAILABLE UNDER EXPLAN ATION 5(2) TO SECTION 271(1)(C). THE REVENUE HAS RAISED SEVERAL GROUNDS ON THE ISSUE . 2. THE RELEVANT FACTS ARE THAT THE PREMISES OF THE ASSESSEE WERE SUBJECTED TO SEARCH U/S. 132 OF THE ACT ON 22.11.2006. DURING T HE COURSE OF SEARCH IN HIS STATEMENTS RECORDED U/S. 132(4), THE ASSESSEE HAD O FFERED UNDISCLOSED INCOME OF RS.35,64,182/- IN HIS PROPRIETARY CONCERN M/S. ARIH ANT JEWELLERS WHICH INCLUDED RS.30,66,682/- ON ACCOUNT OF STOCK AND RS.4,97,000/ - ON ACCOUNT OF DEBTORS FOR UNRECORDED LOANS / ADVANCES. WHILE FILING THE RETU RNS OF INCOME, THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE WAS SPREAD IN THREE YEARS. YEAR-WISE DETAILS IN RESPECT OF ADDITIONAL INCOME OFFERED BY THE ASSESSE E IN THE RETURNS WERE AS UNDER: 2 ITA 630 & 631/PN/2010 A.Y: 2005-06: ADDITIONAL INCOME : RS. 2,82,780/- A.Y: 2006-07: ARIHANT JEWELLARY SUNDRY ADVANCES : RS. 85,50 0/- A.Y: 2007-08: ON ACCOUNT OF EXCESS STOCK : RS. 30,47,922/- ON ACCOUNT OF UNDISCLOSED DEBTOR : RS. 3,55, 500/- TOTAL : RS. 37,71,702/- 3. AFTER COMPLETION OF ASSESSMENTS, THE A.O. INITIA TED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AGAINST THE ASSESSEE ON THE AD DITIONS MADE IN THE ASSESSMENTS. THE ASSESSEE SUBMITTED THAT HE HAD OF FERED UNDISCLOSED INCOME DURING THE COURSE OF SEARCH AND AFTER ACCEPTING THE AFORESAID INCOME ON THE BASIS OF SEIZED MATERIAL, RETURNS OF INCOME WERE FILED AN D TAXES WERE DULY PAID. ACCORDINGLY, ASSESSEE CLAIMED THAT THE ASSESSEE IS ENTITLED FOR IMMUNITY PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) READ WITH S.132(4) OF THE I.T.ACT. THE A.O., DID NOT AGREE WITH THE CLAIMED IMMUNITY ON TH E BASIS THAT THE ASSESSEE HAD NOT STUCK UP TO THE ADMITTED UNDISCLOSED INCOME AND HAD OFFERED ADDITIONAL INCOME AFTER SPREADING IT IN MORE THAN ONE YEAR. THE A.O. ALSO POINTED OUT THAT ADDITIONAL INCOME WAS OFFERED BY THE ASSESSEE ON ACCOUNT OF TA NKER INCOME AND OTHER MISCELLANEOUS INCOME WHICH WAS NOT THE PART OF INCO ME DISCLOSED IN HIS STATEMENTS RECORDED U/S. 132(4) OF THE ACT. THE LD . CIT(A) HAS DELETED THE PENALTY IN QUESTION FOR BOTH THE A.YS. WITH THE FOLLOWING FINDING : I HAVE CONSIDERED FACTS OF THE CASE, SUBMISSION OF THE AR & POSITION OF LAW. IN MY OPINION, THE APPELLANT DESERVES TO SUCCEED. THERE IS NO DISPUTE REGARDING THE FACT THAT AN AMOU NT OF RS.S.35,64,182/- WAS OFFERED BY THE APPELLANT AS UNACCOUNTED ADDITIONAL INCOME DURING THE COURSE OF SEARCH U/S. 132 OF THE ACT. OUT OF THIS, RS.30,66,682/- WAS OF FERED ON ACCOUNT OF STOCK AND BALANCE RS.4,97,500/- IN RESPECT OF DEBTORS FOR UNRECORDED LOANS/ADVANCES. IN APPELLANTS CASE, THERE IS NO DISPUTE SO FAR AS UNACCOUNTED STOCK IS CONCERNED. THE DISPUTE IS MAINLY IN RESPECT OF RS.4,97,500/- ON ACCOUNT OF UNACCOUNTED DEBTORS. FROM PERUSAL OF THE STATEMENT RECORDED US. 132(4), IT IS APPARENT THAT THE AFORESAID AMOUNT WAS REFLECTED IN THE SEIZED DOCUMENT AS UNACCOUNTED CASH LOAN ADVANCED T O VARIOUS PERSONS. THE RELEVANT PORTION OF APPELLANTS STATEMENT RECORDED US.132(4) WHICH IN HINDI AND AS TRANSLATED IS AS UNDER:- Q.NO.45 : I DRAW YOUR ATTENTION ON ANNEXURE A-7, SR.NO.17 AT PAGE NO.59 & 70 WHICH SHOWS NAMES OF SOME PERSONS AND AMOUNTS ADVAN CED TO THEM AND INTEREST ON THAT AMOUNT WHOSE TOTAL COMES TO RS.4,97,500/-, WHAT IS YOUR SAY IN THIS REGARD? ANS: AFTER SEEING ALL THESE PAGES I ACCEPT THAT AM OUNT OF RS.4,97,500/- BELONGS TO ME WHICH I ACCEPT AND DECLARE AS MY ADDITIONAL I NCOME. SUBSEQUENT TO THE SEARCH, THE APPELLANT FURTHER SCR UTINIZED THE SEIZED MATERIAL AND ADDITIONAL INCOME WAS OFFERED IN THE RETURN FILED B Y THE APPELLANT BASED ON ENTRIES RECORDED IN THE SEIZED MATERIAL. WHILE FILING THE RETURNS, THE SPECIFIC PERIOD AND SPECIFIC ENTRIES WERE CLEARLY MENTIONED BY THE APPELLANT. IN VIEW OF THI S, THE AO WAS NOT JUSTIFIED IN ACCEPTING THE APPELLANTS DISCLOSURE AND DENYING IMMUNITY PROVIDE D IN EXPLANATION-5. IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE APPELLANT WAS INDULG ING IN EARNING OF UNACCOUNTED INCOME AND ACCUMULATING UNACCOUNTED FUND WHICH WAS REFLECTED B Y WAY OF UNRECORDED ADVANCE IN THE SEIZED MATERIAL AMOUNT TO RS.4,97,500/-. IF THE AP PELLANT WAS IN POSSESSION OF SUCH UNACCOUNTED FUND, IT IS NATURAL THAT THE SAME WAS E ARNED OVER A PERIOD OF TIME. THEREFORE, 3 ITA 630 & 631/PN/2010 I DO NOT FIND ANY FORCE IN AOS CONTENTION THAT BY MERELY SPREADING THE ADDITIONAL INCOME, THE APPELLANT WILL NOT BE ENTITLED FOR IMMUNITY PRO VIDED BY EXPLANATION-5 TO SECTION 271(1)(C) OF THE ACT. IN THIS CASE, THE APPELLANT FULFILLS ALL THE CRITER IA LAID DOWN IN CLAUSE-2 OF EXPLANATION- 5 TO SECTION 271(1)(C) R.W.S. 132(4) OF THE ACT. T HE ADDITIONAL INCOME OFFERED BY THE APPELLANT IN HIS STATEMENT U/S 132(4) WAS DULY INCO RPORATED IN SUBSEQUENT RETURNS AND MERELY SPREADING IT IN MORE THAN ONE YEAR WILL NOT BE PREJUDICIAL TO THE APPELLANTS CAUSE. THE AO WAS NOT JUSTIFIED IN EXCLUDING THE ADDITIONA L INCOME OFFERED BY THE APPELLANT IN A.Y.2005-06. ONCE THE AO HAS ACCEPTED THE FACT OF U NACCOUNTED ADVANCES AND EARNING OF INCOME FROM SUCH ADVANCES, IT COVERS ENTIRE PERIOD OF THE ADVANCES. THE APPELLANT, THEREFORE, RIGHTLY DISCLOSED THE ADDITIONAL INCOME AFTER SPREADING IT IN MORE THAN ONE YEAR. SIMILARLY, I DO NOT FIND ANY FORCE IN AOS CONTENTI ON THAT THE ADDITIONAL INCOME OFFERED BY THE APPELLANT IN HIS STATEMENT RECORDED U/S.132(4) WAS NOT INCORPORATED IN SUBSEQUENT RETURNS. PERUSAL OF RETURNS OF INCOME F ILED BY THE APPELLANT FOR ABOVE REFERRED YEARS CLEARLY ESTABLISHES THAT TOTAL UNDISCLOSED IN COME OFFERED BY THE APPELLANT IS IN FACT HIGHER THAT THE AMOUNT DISCLOSED DURING THE COURSE OF SEARCH. IN VIEW OF THE ABOVE, IN MY OPINION, THE APPELLANT IS ENTITLED FOR IMMUNITY PRO VIDED IN EXPLANATION-5 TO SECTION 271(1)(C) R.W.S132(4) OF THE ACT IN RESPECT OF ENTIRE DISCLOS URE OF RS.37,71,702/-. OTHER ASPECT OF THE CASE IS IMPOSITION OF PENALTY B Y THE AO ON INCOME OFFERED BY THE APPELLANT OVER AND ABOVE UNDISCLOSED INCOME ADM ITTED DURING THE COURSE OF SEARCH. THE PERUSAL OF RECORD SHOWS THAT THE ADDITIONAL INC OME WAS OFFERED BY THE APPELLANT WHILE FILING HIS RETURNS UNDER THE HEADS SUCH AS INCOME O N HIRING OF TANKER, INTEREST ON UNACCOUNTED ADVANCE AND MISCELLANEOUS INCOME. THER E IS NOTHING ON RECORD TO INDICATE THAT SUCH INCOME WAS OFFERED AS A RESULT OF ANY INV ESTIGATION CARRIED OUT EITHER BY THE DIRECTORATE OF INVESTIGATION OR BY THE AO. SIMILAR LY, THERE IS NOTHING ON RECORD TO INDICATE THAT THE INCOME WAS OFFERED ON THE BASIS OF INCRIMI NATING EVIDENCE FOUND DURING THE COURSE OF SEARCH. THE ASSESSMENT WAS COMPLETED BY THE AO MERELY RELYING UPON THE RETURN OF INCOME FILED BY THE APPELLANT AND NO ATTEMPT WAS MA DE TO LINK IT WITH THE SEIZED MATERIAL. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE ADDIT IONAL INCOME WAS OFFERED VOLUNTARILY AND THE AO WAS NOT IN THE POSSESSION OF ANY MATERIAL IN RESPECT OF SUCH TRANSACTIONS. IN VIEW OF THIS, SUCH VOLUNTARY INCOME OFFERED BY THE APPEL LANT IS OUT OF THE PURVIEW OF IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE ACT. IF WE SEE THE APPELLANTS CASE IN TOTALITY, ALL INC RIMINATING RECORDS FOUND DURING THE COURSE OF SEARCH WERE CONSIDERED AND DISCLOSURE WAS MADE BY THE APPELLANT DURING THE COURSE OF SEARCH PROCEEDINGS. THE CONDUCT OF THE A PPELLANT SUBSEQUENT TO THE SEARCH WAS ALSO FAIR AND LAWFUL. THE ENTIRE DISCLOSURE WAS IN CORPORATED IN THE RETURNS OF INCOME FILED AND UNDER CERTAIN HEADS ADDITIONAL INCOME WAS OFFER ED VOLUNTARILY OVER AN ABOVE DISCLOSURE MADE DURING THE COURSE OF SEARCH. IN MY OPINION, T HE AO WAS NOT JUSTIFIED IN REJECTING THE APPELLANTS CLAIM OF IMMUNITY PROVIDED IN EXPLANATI ON-5 TO SECTION 271(1)(C) OF THE ACT MERELY ON HYPER TECHNICAL GROUND RELATING TO SPREAD ING OF UNDISCLOSED INCOME IN MORE THAN ONE YEAR. IT IS AN ADMITTED POSITION THAT THE TOTA L TAX PAID BY THE APPELLANT IN ABOVE REFERRED YEARS IS MUCH MORE THAN CONCEALED INCOME REFLECTED IN THE EVIDENCES GATHERED DURING THE COURSE OF SEARCH. I, THEREFORE, CANCEL THE PENALTI ES IMPOSED BY THE AO FOR A.YS. 2006-07 & 2007-08. IN THE RESULT THE APPEALS ARE ALLOWED. 4. BEFORE THE TRIBUNAL, THE LD. DR BASICALLY PLACED RELIANCE ON THE PENALTY ORDER AND SUBMITTED THAT IN THE A.Y. 2006-07 RETURN U/S.139(1) WAS FILED ON 11.01.2008 I.E., AFTER THE EXPIRY OF THE PRESCRIBED TIME LIMIT IN THE MONTH OF SEPTEMBER, 2007. TAX WAS ALSO PAID LATER ON. HE SU BMITTED THAT THE ISSUE RAISED IN THE GROUNDS IS FULLY COVERED BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. OMKARESHWARI R. KALANTRI, ITA NO.1004/PN/2009 AND OTHERS, ORDER DATED 05.02.2010. THE LD. DR SUBMITTED THAT I MMUNITY PROVIDED UNDER EXPLANATION 5(2) TO S. 271(1)(C) IS NOT AVAILABLE T O THE ASSESSEE. HE SUBMITTED THAT UNACCOUNTED STOCK OF GOLD AND SILVER AND UNDIS CLOSED DEBTOR WAS FOUND DURING 4 ITA 630 & 631/PN/2010 THE COURSE OF SEARCH AND THE ASSESSEE WHILE OFFERIN G THE ADDITIONAL INCOME HAD NOT DISCLOSED THE MANNER OF EARNING OF THOSE INCOME. T HE LD.DR CITED DECISION OF AHMEDABAD BENCH (THIRD MEMBER) OF THE TRIBUNAL IN T HE CASE OF ACIT VS. KRIIT DAYABHAI PATEL (2009) 125 TTJ (AHD.) (TM) 145. 5. THE LD. AR ON THE OTHER HAND TRIED TO JUSTIFY TH E FIRST APPELLATE ORDER ON THE ISSUE. HE SUBMITTED THAT THE AO HAS NOT SPECIFIED THE REASON FOR NOT MEETING OUT THE REQUIREMENT OF EXPLANATION 5 TO S. 271(1)(C) BY THE ASSESSEE. HE POINTED OUT THAT DURING THE COURSE OF SEARCH ACTION AT THE PREM ISES OF THE ASSESSEE ON 22.11.2006, PRESCRIBED TIME LIMIT WAS AVAILABLE WIT H THE ASSESSEE TO FILE RETURN UNDER SECTION 139(1) OF THE ACT FOR THE AY: 2007-08 . IN THIS REGARD , THE LD. AR REFERRED PAGE NOS.1 AND 2 OF THE PAPER BOOK FILED B Y THE ASSESSEE WHEREIN COPY OF ASSESSMENT ORDER FOR THE AY: 2007-08 HAS BEEN MADE AVAILABLE MENTIONING THEREIN IN THAT THE RETURN FOR THE A.Y. WAS FILED O N 11.01.2008 SHOWING THE INCOME OF RS.36,67,600/-. IN THIS ASSESSMENT ORDER AT PAG E NO.2 THE AO HAS ALSO MENTIONED ABOUT THE PAPERS FOUND DURING THE COURSE OF THE SEARCH WHICH WERE PERTAINING TO UNDISCLOSED DEBTORS OF THE ASSESSEE. AS PER THESE PAPERS, TOTAL AMOUNT OF RS.4,65,694/- WAS RECEIVABLE CONSISTING O F PRINCIPAL AMOUNT OF RS.4,03,275/- AND INTEREST OF RS.62,419/-. ON THIS ACCOUNT THE ASSESSEE HAD SHOWEN ADDITIONAL INCOME OF RS. 4,21,000/- I.E., RS . 85,500/- FOR AY: 2006-07 AND RS.3,55,500/- FOR A.Y: 2007-08 IN THE RETURN OF INC OME FILED U/S. 153A. THE LD. AR ALSO REFERRED PAGE NOS. 21 AND 27 OF THE PAPER BOOK I.E., COPIES OF COMPUTATION OF TOTAL INCOME FOR A.Y: 2007-08 AND PROFIT & LOSS ACC OUNT FOR THE SAME A.Y. HE ALSO REFERRED QUESTION NOS. 45 & 47 AND REPLY THERETO BY THE ASSESSEE RECORDED U/S.132(4) OF THE ACT MADE AVAILABLE AT PAGE NOS. 1 8 & 19 OF THE PAPER BOOK. HE SUBMITTED THAT THE DECISIONS RELIED UPON BY THE LD. DR ARE HAVING DIFFERENT FACTS HENCE ARE NOT APPLICABLE IN THE PRESENT CASE. HE S UBMITTED FURTHER THAT THERE IS NO NEED TO EXPLAIN THE MANNER OF EARNING OF UNDISCLOSE D INCOME TO CLAIM IMMUNITY PROVIDED UNDER EXPLANATION 5 TO SECTION 271(1)(C) O F THE ACT AND PLACED RELIANCE ON THE FOLLOWING DECISONS: 5 ITA 630 & 631/PN/2010 1. CIT VS. MAHENDRA C. SHAH, 299 ITR 305 (GUJ.) 2. DCIT VS. SHRI PRADEEP GULABCHAND JAIN, ITA 125/P N/2010 (AY 2007-08), ORDER DATED 30.11.2011 6. CONSIDERING ABOVE SUBMISSIONS, WE FIND THAT THE ISSUE INVOLVED IN THE GROUNDS OF THESE APPEALS IS AS TO WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE THE ASSESSEE IS ENTITLED TO EXEMPT ION FROM LEVY OF PENALTY UNDER THE EXEMPTIONS PROVIDED UNDER EXPLANATION 5 TO SEC. 271(1)(C) OF THE ACT. THE ASSERTION OF THE LD.AR IS THAT CASE OF THE ASSESSEE FALLS UNDER THE EXCEPTION TO THE LEVY OF PENALTY PROVIDED IN CLAUSE (2) TO EXPLANATI ON 5 TO SEC. 271(1)(C) OF THE ACT. FOR A READY REFERENCE EXPLANATION 5 TO SECTION 271( 1)(C) ARE REPRODUCED HEREUNDER: EXPLANATION 5 :- WHERE IN THE COURSE OF A [SEARC H INITIATED UNDER SECTION 132 BEFORE THE 1 ST DAY OF JUNE, 2007], THE ASSESSEE IS FOUND TO BE TH E OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREA FTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HA VE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HIS INCOME, - (A) FOR ANY PREVIOUS YEAR WHICH HAS ENDED BEFORE TH E DATE OF THE SEARCH, BUT THE RETURN OF INCOME FOR SUCH YEAR HAS NOT BEEN FURNISH ED BEFORE THE SAID DATE OR, WHERE SUCH RETURN HAS BEEN FURNISHED BEFORE THE SAI D DATE, SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) FOR ANY PREVIOUS YEAR WHICH IS TO END ON OR AFT ER THE DATE OF THE SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF THE SEARCH, HE SHALL, FOR T HE PURPOSES OF IMPOSITION OF A PENALTY UNDER CLAUSE C OF SUB-SECTION (1) OF THIS SECTION, BE DEE MED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF S UCH INCOME, [UNLESS, - (1) SUCH INCOME IS, OR THE TRANSACTIONS RESULTING I N SUCH INCOME ARE RECORDED, - (I) IN A CASE FALLING UNDER CLAUSE (A), BEFORE THE DATE OF THE SEARCH; AND (II) IN A CASE FALLING UNDER CLAUSE (B), ON OR BEFO RE SUCH DATE, IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME OR SUCH INCOME IS OTHERWISE DISCLOSED TO THE [CHIEF CO MMISSIONER OF COMMISSIONER] BEFORE THE SAID DATE; OR (2) HE, IN THE COURSE OF THE SEARCH, MAKE A STATEME NT UNDER SUB-SECTION (4) OF SECTION 132 THAT NAY MONEY, BULLION, JEWELLERY OR O THER VALUABLE ARTICLE OR THING FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, HAS B EEN ACQUIRED OUT HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN O F INCOME TO BE FURNISHED BEFORE THE EXPIRE OF TIME SPECIFIED IN [***] SUB-SE CTION (1) OF SECTION 139, AND ALSO SPECIFIES IN THE STATEMENT THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, I F ANY, IN RESPECT OF SUCH INCOME. 7. ON PERUSAL OF THE ABOVE PROVISIONS, WE FIND THAT REQUIREMENTS TO CLAIM BENEFIT UNDER CLAUSE (2) OF EXPLANATION 5 TO SECTIO N 271(1)(C) ARE AS UNDER: I) ASSESSEE HAS STATED U/S. 132(4) THAT HE HAS ACQU IRED ANY MONEY, BULLION, JEWELLARY OR OTHER VALUABLE ARTICLE OR THI NG FOUND IN HIS POSSESSION OR UNDER HIS CONTROL, OUT OF HIS INCOME WHICH HAS NOT BEEN DISCLOSED SO FAR IN HIS RETURN OF INCOME, AND II) THE SAID RETURN OF INCOME IS TO BE FURNISHED BE FORE THE EXPIRY OF THE TIME SPECIFIED IN SUB-SECTION (1) OF SECTION 139, A ND III) THE ASSESSEE ALSO SPECIFIES IN THE STATEMENT T HE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAYS THE TAX, TOGE THER WITH INTEREST, IF ANY, IN RESPECT OF SUCH INCOME. 6 ITA 630 & 631/PN/2010 8. THERE IS NO DISPUTE SO FAR AS FULFILLMENT OF ING REDIENT NO.(I) IS CONCERN. IN THIS REGARD, REPLY OF ASSESSEE TO QUESTION NOS. 45 & 47 RECORDED U/S.132(4) IN HINDI LANGUAGE HAVE BEEN GONE THROUGH. VIDE QUESTI ON NO.45, THE ATTENTION OF THE ASSESSEE WAS BROUGHT TO ANNEXURE A SL.NO.19, PAGE NOS.59 AND 60, WHEREIN NAMES OF SOME PERSONS ALONG WITH AMOUNT GIVEN ON IN TEREST AND INTEREST EARNED HAVE BEEN ENTERED, TOTAL OF WHICH COMES TO RS.4,97, 500/-. ASSESSEE WAS REQUIRED TO COMMENT UPON IT. THE REPLY OF THE ASSESSEE WAS THAT THE AMOUNT OF RS.4,97,500/- BELONGS TO HIM, WHICH HE DECLARES AS HIS ADDITIONAL INCOME. IN QUESTION NO.47, THE ASSESSEE WAS ASKED ABOUT HIS EX PLANATION TO THE AMOUNT IN DIFFERENCE BETWEEN THE STOCK OF GOLD AND SILVER FOU ND DURING THE COURSE OF SEARCH WORTH RS. 10,85,21,032/- AND THOSE SHOWN WORTH RS.6 1,91,288/- RECORDED IN THE TRADING ACCOUNT MAINTAINED BY HIM. THE ASSESSEE RE PLIED THAT VALUATION SHOULD HAVE BEEN DONE ON THE BASIS OF COST PRICE AND NOT A S PER THE MARKET PRICE, HENCE AS PER HIM THE DIFFERENCE IN THE VALUE OF STOCK IS ONLY RS. 30,66,682/-, WHICH HE DECLARES AS HIS ADDITIONAL INCOME FOR A.Y: 2007-08. 9. SO FAR AS INGREDIENT NO. (II) IS CONCERNED ADMIT TEDLY DUE DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT FO R THE A.Y: 2006-07 WAS EXPIRED AT THE TIME OF SEARCH, BUT THE SAME WAS STILL AVAIL ABLE FOR THE A.Y: 2007-08. 10 WE HAVE ALREADY SEEN ABOVE THE RELEVANT QUESTION NOS. 45 AND 47 AND REPLY OF THE ASSESSEE RECORDED U/S. 132(4) THERETO, WHEREIN THE ASSESSEE HAS SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND THERE IS NO DISPUTE THAT THE ASSESSEE AS PER HIS UNDERTAKING HA S ALSO PAID TAX ON THOSE ADDITIONAL INCOME. 11. THOUGH IN THE PRESENT CASE THE ASSESSEE IN HIS STATEMENT RECORDED U/S.132(4), AS DISCUSSED ABOVE HAS SPECIFIED THE MA NNER OF EARNING OF THE INCOME BUT AS PER THE DECISION OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF CIT VS. MAHENDRA C. SHAH, (SUPRA) FOLLOWED BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHRI PRADEEP GULABCHAND JAIN (SUPRA), IT I S NOT REQUIRED TO SPECIFY THE 7 ITA 630 & 631/PN/2010 MANNER IN WHICH THE INCOME WAS EARNED IN RESPECT OF AMOUNT OFFERED TO TAX IN THE RETURN OF INCOME FILED PURSUANT TO SEARCH ACTION BY PAYING TAXES THEREON FOR AVAILING IMMUNITY FROM PENALTY UNDER EXPLANATION 5 OF SECTION 271(1)(C) OF THE ACT. THE ONLY GRIEVANCE OF THE A.O. IS REGARDING SPREADI NG OF ADDITIONAL INCOME OF RS.4,97,500/- BY THE ASSESSEE IN DIFFERENT YEARS IN HIS RETURNS OF INCOME, WHICH AS PER THE A.O. SHOULD HAVE BEEN OFFERED IN THE YEAR O F THE SEARCH. THE ASSESSEE, AS PER UNREBUTTED OBSERVATION OF THE LD.CIT(A) HAD OFF ERED THE ADDITIONAL INCOME BASED ON SPECIFIC PERIOD AND SPECIFIC ENTRIES RECO RDED IN THE SEIZED MATERIAL. IT IS EVIDENT FROM THE FACTS OF THE CASE THAT THE ASSESSE E WAS INDULGING IN EARNING OF UNACCOUNTED INCOME AND ACCUMULATING UNACCOUNTED FUN D WHICH WAS REFLECTED BY WAY OF UNDISCLOSED ADVANCES IN THE SEIZED MATERIAL AMOUNT TO RS.4,97,500/-. ONCE THE A.O. HAS ACCEPTED THE FACT OF UNACCOUNTED ADVANCES, IT COVERS ENTIRE PERIOD OF THE ADVANCES. THE A.O. WAS THUS NOT JUSTI FIED IN EXCLUDING THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE IN A.Y: 2005-06. 12. FROM THE ABOVE ANALYSIS OF FACTS OF THE PRESENT CASE REQUIRED FOR EXAMINING THE ELIGIBILITY OF ALLOWING BENEFIT OF THE IMMUNITY FROM LEVY OF PENALTY UNDER THE EXCEPTION PROVIDED IN EXPLANATION 5(2) TO SEC. 271( 1)(C), WE COME TO THE CONCLUSION THAT IN THE A.Y. 2006-07, THE ASSESSEE H AS FAILED TO COMPLY WITH THE REQUIREMENT OF INGREDIENT NO.(II) DISCUSSED ABOVE O F EXPLANATION 5(2) TO SEC. 271(1)(C) AS THE ASSESSEE HAD NOT FILED RETURN OF I NCOME U/S. 139(1) FOR THAT YEAR, INDICATING THAT THE ASSESSEE WAS HAVING NO INTENTIO N TO DISCLOSE THOSE ADDITIONAL INCOME EARNED DURING THE YEAR BUT TO CONCEAL THEM, WHICH COULD BE REVEALED DUE TO THE SEARCH. IN THIS REGARD, WE FIND STRENGTH FR OM THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. SHRI OMKAREHSW AR R. KALANTRI AND OTHERS (SUPRA) HOLDING THAT THE ASSESSMENT FRAMED U/S.153A (1)(B) OF THE ACT AFTER SEARCH ACCEPTING THE RETURN OF INCOME AS DISCLOSED BY THE ASSESSEE DURING THE COURSE OF SEARCH IS OVER AND ABOVE WHAT WAS DISCLOSED IN THE ORIGINAL RETURN, SINCE THE ASSESSEE HAD TO DISCLOSE THEIR REAL TOTAL INCOME IN THE ORIGINAL RETURN FILED UNDER SEC.139(1), IF THEY HAD FAILED TO DO SO BUT CONCEAL ED OR FURNISHED INACCURATE PARTICULARS IN THAT RETURN, THE OFFENCE BECOMES COM PLETE. THUS THE OFFENCE OF THE 8 ITA 630 & 631/PN/2010 CONCEALMENT IS COMPLETE AND FINAL WHEN THE ASSESSEE HAD NOT DISCLOSED THE ADDITIONAL INCOME IN THE PRESENT CASE BEFORE US BY FILING RETURN OF INCOME U/S.139(1) FOR THE A.Y; 2006-07. SINCE FOR THE A.Y : 2007-08 PRESCRIBED TIME LIMIT WAS STILL AVAILABLE WITH THE ASSESSEE FOR FILING HI S RETURN OF INCOME U/S.139(1) FOR THE YEAR, ON THE DATE OF SEARCH, IT CANNOT BE HELD BEYO ND DOUBT THAT THE ASSESSEE WAS NOT GOING TO DECLARE THOSE ADDITIONAL INCOME FOUND DURING THE COURSE OF SEARCH, WHICH THE ASSESSEE HAD OFFERED IN HIS RETURN OF INC OME FILED U/S.153A OF THE ACT. THUS OFFENCE U/S. 271(1)(C) WAS NOT COMMITTED FOR T HE OFFERED INCOME FOR THIS YEAR (A.Y. 2007-08) AS THESE WERE NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF THOSE INCOME DURING A.Y. 2007-08 ON THE PART OF THE ASSESSEE. THE IMMUNITY UNDER EXPLANATION 5(2) TO S EC. 271(1)(C) WAS THUS AVAILABLE TO THE ASSESSEE ON THE ADDITION MADE IN T HE ASSESSMENT FOR A.Y: 2007- 08. 13. UNDER ABOVE CIRCUMSTANCES, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) ON THE A DDITIONAL INCOME DISCLOSED ON THE BASIS OF SEARCHED MATERIAL AND ASSESSED IN THE A.Y. 2006-07. THE SAME IS SET ASIDE AND PENALTY ORDER TO THAT EXTENT IS RESTORED. WE HOWEVER DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER SO FAR AS DELETION OF PENALTY ON ADDITION MADE IN THE ASSESSMENT FOR A.Y: 2007-08 IS CONCERNED. 14. CONSEQUENTLY GROUND QUESTIONING THE ACTION OF T HE LD.CIT(A) IN DELETING PENALTY IN THE APPEAL FOR THE A.Y: 2006-07 IS ALLO WED AND THAT IN THE A.Y. 2007-08 IS REJECTED. 15. IN RESULT, ITA NO.630/PN/2010 (A.Y: 2006-07) IS ALLOWED AND ITA NO.631/PN/2010 (A.Y: 2007-08) IS DISMISSED. 16. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 3 RD DECEMBER, 2011. SD/- SD/- (G.S. PANNU) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 23 RD DECEMBER, 2011 9 ITA 630 & 631/PN/2010 COPY TO: 1. SHRI UMESH M. SANCHETI, M/S. NAKODA, NAVAJEEVAN COLONY, VAIJAPUR, AURANGABAD DT. 2. INCOME-TAX OFFICER (CENTRAL), AURANGABAD 3. THE COMMISSIONER OF INCOME-TAX (CENTRAL), NAGPUR 4. THE COMMISSIONER OF INCOME-TAX (APPEALS), AURANG ABAD 5. THE COMMISSIONER OF INCOME-TAX (DR), ITAT, PUNE 6. GUARD FILE BY ORDER, SENIOR PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES, PUNE